T5-induced DNA polymerase has an associated 3' to 5' exonuclease activity. Both single-stranded and duplex DNA are hydrolyzed by this enzyme in a quasi-processive manner. This is indicated by the results of polymer-challenge experiments utilizing product analysis techniques. Due to the quasi-processive mode of hydrolysis, the kinetics of label release from the 3'-terminally labeled oligonucleotide substrates, annealed to complementary homopolymers, show an initial high rate of hydrolysis. In the case of both single-stranded and duplex DNA substrates, hydrolysis seems to continue, at best, up to the point where the enzyme is five or six nucleotides away from the 5-end. The enzyme carries out mismatch repair, as evidenced by experiments with primer molecules containing improper base residues at the 3'-OH terminus. Control experiments with complementary base residues at the 3'-end indicate that extensive removal of terminal residue takes place in the presence of dNTP's only when such residues are "improper" in the Watson-Crick sense.